US judge declares Venezuelan oil company PDVSA’s 2020 bonds valid

NEW YORK (Reuters) – A U.S. judge upheld the validity of Venezuelan state oil company PDVSA’s 2020 bonds on Thursday, in a blow to the company, which had argued that the defaulted bonds were not properly issued.

The bonds are secured by a majority stake in U.S. refiner Citgo , which is owned by PDVSA. The company defaulted on the bonds in 2019, putting the refiner at risk of seizure by creditors.

On Thursday, U.S. District Judge Katherine Polk Failla in Manhattan ruled that the bonds were indeed properly issued under Venezuelan law. She had previously declared the bonds valid in 2020, but an appeals court later ordered further review.

Separately, a sale hearing got underway this week in Delaware to auction off shares in Citgo’s parent company to other creditors. The hearing was temporarily suspended on Thursday to allow the court to review Failla’s ruling.

(Reporting by Luc Cohen in New York and Marianna Parraga in Houston; Editing by Chizu Nomiyama)